ICANN

The Shimkus Amendment to the $601 billion National Defense Authorization Act (HR 4435) passed the House of Representatives yesterday on a mostly partisan vote of 245 – 177. While all 228 Republicans present and voting supported the amendment only 17 Democrats voted “aye”, with 177 in opposition. Final passage on the entire bill was a bipartisan vote of 325-98.

The Senate has not yet passed its version of a FY 2015 Pentagon funding bill, and once it does all the differences between the two versions must be reconciled before it can be sent to President Obama for his signature. There’s no indication yet whether a similar amendment will be offered in the Senate or whether enough Democratic votes can be picked up to pass it on that side of Capitol Hill.

The Shimkus amendment embodied the text of the DOTCOM Act. It would prohibit the NTIA from transitioning oversight of the IANA root zone functions from US oversight to a multistakeholder entity until Congress had received a report from the GAO analyzing the implications of the transition plan. It would provide GAO with a one-year period to complete that study, with the clock starting when ICANN transmitted a transition plan for NTIA review. As no such plan is expected to be forthcoming until sometime in 2015, the Act would essentially make it all but impossible to complete the transition by the September 2015 end date of the current IANA contract, and would thus trigger the need for a two-year extension – an option already provided for in that contract. NTIA head Larry Strickling and ICANN CEO Chehade stressed in recent Congressional testimony that September 2015 was just a goal and not a deadline. But we’d wager that ICANN very much wants to avoid a contract extension, and parties outside the US want IANA globalization by 2015 as expressed in the final document issued at last month’s NETmundial meeting in Brazil.

Meanwhile, in the Senate, Senator Marco Rubio of Florida and eight other Senate Republicans have just sent a letter to Commerce Committee Chairman Jay Rockefeller asking that the Committee hold an oversight hearing on the IANA transition proposal. With the DOTCOM amendment on its way over from the House, and with the House expected to shortly pass a Department of Commerce appropriations bill that slashes NTIA funding to deny it the monetary capability to carry out the transition, it would appear to be a good time for the Senate to start informing itself on the matter. Rockefeller has shown past interest in ICANN, having held oversight hearings on the new gTLD program and most recently sending a letter to NTIA raising concerns about .Sucks and similar new gTLDs. Any Senate Commerce oversight hearing might well include a look at the status of the new gTLD program, as it is the largest and riskiest effort ever undertaken by ICANN and the market and operational status of the new gTLD rollout might be viewed as indicative of its readiness to sever its last formal connection with the US government.

The text of the Rubio letter follows:

May 21, 2014

Dear Chairmen Rockefeller, Pryor and Ranking Members Thune and Wicker:

We are writing to respectfully request that the Senate Committee on Commerce, Science, and Transportation (“the Committee”) hold a hearing to review the National Telecommunications and Information Administration’s (NTIA) announcement to transition oversight of certain Internet domain name functions to the global multistakeholder community. This transition, if it occurs, could have profound consequences on the future of Internet governance and freedom, and therefore deserves a close examination by the Committee.

Last Congress many of us were leaders on S. Con. Res. 50 (SCR 50), which reinforced the U.S. government’s opposition to ceding control of Internet governance to the International Telecommunications Union (ITU) or to any other governmental body. By unanimously passing SCR 50, Congress sent a strong message of support for the existing bottom-up, multistakeholder approach to Internet governance. The current model has enabled individual empowerment and technological advancement around the world, and has ensured the Internet remains free from the control of governments and intergovernmental organizations.

Congress must once again lead the cause for Internet freedom. All of the signatories of this letter also sent several questions to NTIA in March. While we appreciate NTIA’s response, there are a number of unresolved questions concerning NTIA’s decision, as well as uncertainty about how this transition will unfold. NTIA’s announcement must be carefully considered and understood, which is why the Committee must conduct rigorous oversight of this decision and process.

Since the announcement by NTIA, the United States has sent delegations to the Internet Corporation for Assigned Names and Numbers (ICANN) 49 conference in Singapore and to the NETmundial meeting on the future of Internet governance in Brazil. NTIA’s decision and ICANN’s future role were discussed at both conferences, and we understand that countries like China and Russia pushed back against the multi-stakeholder model and toward greater control over the Internet.

It is important that the Committee, Congress, and the American people hear from NTIA, members of the U.S. delegation, and other Internet stakeholders about how these conferences went and what the global community is proposing. Chairman Rockefeller, when the Committee held a hearing in December 2011 on ICANN’s expansion of top level domains, you stated:

As the Senate Committee tasked with examining issues related to the Internet, it is critical that we understand what this will mean for the millions of Americans who use the Internet on a daily basis and the thousands of businesses and organizations that now depend upon the Internet to reach their customers and members.

That statement certainly applies today to NTIA’s proposed transition. As this process unfolds and NTIA engages the global Internet community, it is imperative the Committee exercise its jurisdiction and conduct careful oversight on behalf of the American people to ensure Internet freedom is protected. The House has already held two hearings, and the global Internet community continues to convene. We must do the same. This announcement and the outcome of this proposed transition are too important for the Committee to remain silent. We appreciate your consideration of this request and look forward to working with all of you on this important issue.

In an unanticipated move a third Committee of the US House of Representatives has weighed in with concerns regarding the NTIA’s proposed transition of the US role as counterparty to ICANN’s IANA functions contract to one with the “global multistakeholder community”.

On May 13th the House Armed Services Committee Report for HR 4435, the Defense Authorization bill, was released. It contains language referring to the ICANN transition and, in particular, the .Mil top level domain which is administered by the US Department of Defense Network Information Center (NIC, which also runs the g-root authoritative root server — while the h-root server is operated by the US Army Research Lab). The Report language (reproduced at the end of this post) questions whether .Mil, which has always been available solely for US military operations, will remain protected post-transition – and also states that “any negotiations that occur should include verifiable measures for maintaining a separation between the policymaking and technical operation of root-zone management functions and that such protections should be a red line in interagency discussions and U.S. Government positions.” (Emphasis added) The introduction of US national security concerns brings a new element into discussions of the IANA transition.

This latest action follows on the heels of IANA-related steps recently taken by two other House Committees:

The Commerce Committee passed the DOTCOM Act (HR 4342), which would delay any final decision on transfer of IANA oversight for up to one year while the GAO studied the matter.

Even more significantly, exercising the Congressional “power of the purse”, the Appropriations Committee slashed NTIA’s budget for the coming fiscal year by $14.3 million, from $51 to $36.7 million, with the specific intent of denying NTIA any funds to carry out the IANA transition in FY15.

The House will likely take up The Commerce, Justice, Science and Related Agencies Appropriations Act for FY2015, which contains that cut in NTIA funding, next week. Further, we have just learned that Rep. John Shimkus, lead sponsor of the DOTCOM Act, has filed the text of that legislation as an amendment to be offered to the Defense Authorization bill that is currently being considered on the House floor, and we expect both it and the underlying bill to pass the House.

All of these prior actions were taken on party-line votes in the Republican-controlled and highly polarized House, and next week’s House floor vote will likely follow that pattern. While such Senate Democrats as Robert Menendez and Mark Warner have expressed concerns about the IANA transition, we’d wager that if these proposals are passed by the House and sent over to the Senate they will never receive a vote so long as Harry Reid is the Democrat’s Majority Leader. Senate Democrats will also likely resist accepting the House provisions if a conference committee is appointed to seek resolution of the different positions on the appropriations bill.

However, given that the earliest goal for completing the IANA transition is September 2015, when the current contract term expires (although the US has the option of extending it for two more 2-year terms) the situation could change dramatically if Republicans succeed in gaining control of the Senate in the November 2014 elections. Most pollsters and election analysts give them a slightly better than even chance of doing so, given President Obama’s current low approval ratings as well as the historic trends for mid-term Congressional elections in a President’s second term. Yesterday’s primary results, in which Senate Minority Leader Mitch McConnell and other “establishment” GOP candidates defeated “tea party” challengers probably enhance that possibility of Republican Senate control in 2015-16.

ICANN’s initial proposal for both the process and scope of IANA transition discussions has already encountered broad and vocal opposition. Its new proposal for a parallel process to determine enhanced accountability mechanisms may prove equally controversial (we’ll be writing more on that shortly). While it remains to be seen how ICANN will respond to criticism of its proposed pathway, the NTIA has made clear that it expects it to convene an unbiased community discussion that results in a transition plan and accompanying accountability provisions that are credible and have broad consensus support. That deliberative process will take some considerable time, and in the interim the US political context could undergo significant alterations.

Here’s the Armed Services Committee Report language—

INTERNET GOVERNANCE

The committee is aware of a recent proposal by the Department of Commerce to start the process of transferring the remaining Department of Commerce-managed Internet Assigned Numbers Authority (IANA) functions to the global multi-stakeholder community. The committee is also aware that such a transition is supported by the Administration, many in industry, and the international community.

The committee urges caution in such discussions to understand the full ramifications of any transition of responsibility, since the United States has played an important role in overseeing the stability of the Internet. As noted in recent testimony before the Committee on the Judiciary of the House of Representatives, “Any pledge, commitment, or oath made by the current ICANN [Internet Corporation for Assigned Names and Numbers] leadership is not binding unless there is some accountability mechanism in place to back up that promise. Until now, the United States has served that role. If the U.S. Government is no longer providing that stability, an alternative mechanism is needed to ensure that ICANN is held accountable to the public interest.” Additionally, as this testimony points out, “U.S. oversight has served as a deterrent to stakeholders, including certain foreign countries, who might otherwise choose to interfere with ICANN’s operations or manipulate the Domain Name Servers for political purposes. For example, a country may want to censor a top-level domain name or have ICANN impose certain restrictions on domain name registries or registrars.”

Because of the Department of Defense’s equities in a secure and transparent Internet governance system, the committee believes it is important to ensure that any new Internet governance construct includes protections for the legacy .mil domains and maintains the associated Internet protocol numbers. Furthermore, the committee believes that any negotiations that occur should include verifiable measures for maintaining a separation between the policymaking and technical operation of root-zone management functions and that such protections should be a red line in interagency discussions and U.S. Government positions.

We have finally had a chance to review the transcript of the Public Forum with the ICANN Board held on March 27th in Singapore. ICA generally takes advantage of those opportunities for interaction to acquaint the Board with matters of concern to the domain investment community.

Two issues were addressed in our Singapore statement. The first was the attempt by UN-affiliated International Governmental Organizations (IGOs), as well as some International Non-Governmental Organizations (INGOs), to block their acronyms from being available at any new gTLD – a position that could eventually threaten some valuable domains at incumbent gTLDs. Our remarks reiterated support for the unanimously adopted GNSO Council resolution on this matter. Subsequent to the Singapore meeting we filed a comment letter that told ICANN it was time to respond to these unreasonable demands with a firm and responding “No”.

The second matter was cybersquatting at new gTLDs. From its inception ICA’s Code of Conduct has taken a strong stand against intentional trademark infringement. Several domain industry bloggers have noted clearly infringing activity going on at new gTLDs. And one law firm reported in February in regard to the just-launched .Bike gTLD:

[O]f the 20 brands selected for the study, as of February 10, 2014, all 20 were registered as domain names in .BIKE. However, only four of the 20 brands have clearly been registered by the actual brand owner. According to WHOIS data, another three are being held by the registry Donuts, and it is unclear for what purpose—whether as a premium name, as part of a blocking program, or otherwise. The other 13 are all being held by third parties who seemingly have no relation to the brand owner, quite possibly cybersquatters. While the sample size of this study is small and not necessarily statistically significant, it supports the supposition that most bicycle brands either were not aware of the .BIKE launch or did not take protective steps to prevent potential cybersquatting once the launch occurred.

Just after that study was issued I received an unsolicited e-mail from an individual in India offering many new gTLD domains for sale – including formula.bike, a name associated with an Italian manufacturer of specialty racing bike parts.

We don’t yet know the extent of intentional cybersquatting at new gTLDs and whether it is significant, and not every generic word registered at a particular new gTLD is going to meet the dual UDRP/URS standard of bad faith registration and use. We also don’t know if any of these cybersquatted domains is receiving any substantial traffic and thereby generating any type of significant income to the registrant (doubtful); or whether any are being for bad purposes beyond infringement.

What we do know is that such activities are not just stupid because they invite legal action, but that they are wrong. And we know that when UDRP reform is initiated in 2015 certain trademark interests may point to these activities as evidence that allegedly supports changes that would reduce the due process rights of legitimate domain registrants. Ditto for proposed changes to national laws such as the U.S. Anticybersquatting Consumer Protection Act (ACPA).

That’s why it’s important for ICA to get on the record reiterating our condemnation of such infringement and asking what ICANN is doing to monitor and analyze the situation. When we engage in that UDRP review discussion we want no questions raised about the commitment of ICA and its members to respecting trademark law — so that we can better press the point that domain rights and trademark rights should be equitably balanced.

PHILIP CORWIN: Good afternoon. Philip Corwin speaking in my capacity as counsel to the domain name investors and developers of the Internet Commerce Association and briefly addressing two issues related to the new TLD program. The first is the ongoing discussion of the protections for acronyms of IGOs and INGOs at new TLDs. ICA is strongly in support of the resolution adopted unanimously by the GNSO council on this issue. We think it’s important at a time when we’re ‐‐ a multistakeholder model is being watched by the world — for that resolution to be put into effect and also to address concerns about the role of governments in a post‐NTIA environment. I would note that many short acronyms are extremely valuable domain names. They can be used in a totally noninfringing fashion and that it’s extremely critical to my members that there being a meaningful appeals process which is both perceived and actually provides a fair treatment of both parties.

Turning to the second issue, it’s too early to make a judgment but we have noticed from various analyses and reports that there is unfortunately some intentional cybersquatting going on at new TLDs. ICAs Code of Conduct since its inception has strongly condemned that. We’re monitoring this situation. We’re also monitoring the use of the URS and so far it does seem to be being used as a narrow supplement to the UDRP, and we certainly hope that ICANN staff is giving full attention to this issue because it’s important to the perception of the program and setting up the environment for the discussion of UDRP reform which will start next year. Thank you very much.

BILL GRAHAM: Thank you. We’ll have a brief presentation on the NGO/INGO names at the beginning of the next session.

On April 24th the NETmundial “Global Multistakeholder Meeting on the Future of Internet Governance” concluded with the issuance of an eight-page statement. This non-binding document is hardly the “Magna Carta for the Internet” called for in an opening statement delivered by Tim Berners Lee, but it does set the stage for the other two major 2014 events that will affect the course of Internet Governance (IG) – the IGF meeting in Istanbul, Turkey and the ITU meeting in Busan, Korea.

Before turning to the final outcome document a separate and very important development took place on the meeting’s final day. That was ICANN CEO Fadi Chehade’s statement at the IANA transition session that the transition plan and the broader issue of improved ICANN accountability are “very interrelated” and that ICANN will publish a proposal for a consultation on improved accountability this week — adding that the two processes will develop “hopefully together on the same time line”.

While a welcome clarification, this statement is inevitable recognition that the need for periodic renewal of the IANA functions contract operated as a powerful tool to make ICANN adhere to the Affirmation of Commitments (AOC) signed with the US but providing global benefits in regard to ICANN accountability and transparency. Many parties both within and outside the ICANN community will never sign off on an IANA transition proposal unless it is accompanied by a robust and reliable ICANN accountability mechanism. Further, it is likely the IANA transition process proposed by ICANN earlier this month will encounter some stiff pushback from many members of its community because it proposes structural details (e.g., Steering Committee guidance and composition) that should be left to the community to determine — and its proposed definition of what is and is not within scope for the discussion is far too narrow and tries to predetermine an outcome in which ICANN receives permanent possession of those IANA functions, with no other options permitted for discussion.

Turing to the final NETmundial document:

Its provision on the IANA transition makes clear that it will not be possible to confine the discussion to the ICANN community and the I-star technical organizations. Further, the call for “striving towards a completed transition by September 2015” demonstrates that there will likely be some global outcry if a transition plan is not completed by then, notwithstanding recent NTIA and ICANN statements before the U.S. Congress that September 2015 is just a goal and not a deadline. Nonetheless, this is a matter so crucial that getting it done right is far more important than getting it done fast — and that includes completion of the tandem plan on enhanced and reliable ICANN accountability before any IANA transition plan is considered final and ready for review.

Its call for ICANN’s globalization to result in “clearly implementable and verifiable accountability and transparency mechanisms” is welcome and again underlines the crucial role that the accountability plan will play.

The Internet Governance Principles contain no big surprises and are pretty much the DNS equivalent of “motherhood and apple pie”. One exception is the sentence, at the Accountable bullet for IG Process Principles, which declares, “Governments have primary legal and political accountability for the protection of human rights.” While that is true, it is likewise true that the greatest threats to human rights on the Internet come from certain repressive governmental regimes — and the document clearly ducked an opportunity to address that inconvenient fact. The advancement last week of Russian Internet censorship legislation and China’s actions this week to further remove and censor online content – justified by its Communist party’s declaration that “there can be no Internet freedom without order” – just underline that sorry fact as well as the real dangers of any expanded government role in Internet governance.

In regard to the more important Roadmap for Future Evolution for IG, which will have bearing on the IGF and ITU events as well as other developments down the road:

The declaration that “enhanced cooperation as referred to in the [2005 WSIS] Tunis Agenda…must be implemented on a priority and consensual basis” and a later reference to the “Information Society as defined by the WSIS outcome documents”, raises some real concerns, especially as that Agenda opined that “[t]he international management of the Internet should be multilateral” and not multistakeholder. We will all need to review that nearly ten year old, 20-page long document to figure out the full implications of its referencing in Sao Paulo – where Russia, China, India, and many other governments made clear that they had not yet evolved to a multistakeholder mindset. While the Tunis Agenda led to the establishment of the IGF, it is also replete with calls for UN leadership.

The references to adequate funding for “capacity building and empowerment”, though understandable, stop short of advocating any digital divide “domain tax” levied on registrants as some called for at the Opening Ceremony. In this regard, the keynote remarks of Nnenna Nwakanma, which concluded with a paean to Moscow-dwelling Edward Snowden, are now available. They state that social and economic justice lead to the conclusion that “we need to start considering the Internet as public commons” and continue:

How do we ensure that resources are mobilized and maintained for a viable Internet Governance mechanism? The question is not just at the global level, but also at regional and national levels. Whose resources are we going to commit? My leaning is that the Internet should be able to provide resources for its own governance. Maybe, part of the domain name fees could be reinvested here. (Emphasis added)

While ICANN may have to expend some resources to participate in relevant meetings and thereby contribute to the Internet governance ecosystem, the fees it collects from domain registrants via registrar and registry Internet intermediaries should be used solely to fund its own role as technical manager of the DNS and for related policy matters. Having ICANN go beyond that narrow remit and redistribute registrant fees to global, regional, or national IG activities would convert it into a multinational tax-and-spend organization. That is not only inappropriate but would be accompanied by a large potential for corrupting digital cronyism. This is a dangerous idea that bears continued close scrutiny.

The call for a strengthened IGF is probably both inevitable and welcome, That Forum is a known quantity with established procedures, and it is better to enhance its activities rather than reinvent the wheel with new organizations or meetings. Nonetheless, as demonstrated by the heavy participation of governments at NETmundial, the pending US withdrawal from IANA counterparty status and the likelihood that the IGF will evolve into a decision-making entity will almost surely attract much more active participation by governments in future IGF activities. Whether this works out well or badly remains to be seen.

The identification of “Jurisdiction issues and how they relate to IG” as something to be discussed beyond NETmundial bears watching. A separate group exploring that is looking to have national laws “co-exist” in cyberspace – whether that can be accomplished without diluting the fundamental rights and freedoms of Internet users residing in nations with strong protections is uncertain.

The official U.S. statement issued upon NETmundial’s conclusion declared that “hundreds of stakeholders from around the world convened to discuss and agree upon a shared vision for the multistakeholder model of Internet governance that seeks to further develop an increasingly open, transparent, inclusive, and responsive system” and that its Multistakeholder Statement “endorsed the transition of the U.S. Government’s stewardship role of IANA functions to the global multistakeholder community, consistent with our stated principles”. The U.S. surely breathed a sigh of relief that the meeting did not blow up in acrimony — and that the final document makes no direct reference to the NSA data collection program, stating more generally that, “Mass and arbitrary surveillance undermines trust in the Internet and trust in the Internet governance ecosystem. Collection and processing of personal data by state and non-state actors should be conducted in accordance with international human rights law.”

The U.S. statement also recognizes that NETmundial was just the opening event in this year’s IG passion play, stating, “NETmundial marks one of many critical global discussions planned for the multistakeholder community this year. The U.S. Government supports these discussions and looks forward to working collaboratively with the global community to strengthen the Internet governance structure, enabling broad participation from governments, businesses, civil society, technology experts and academia.” The fact that the U.S. delegation was led by White House Cybersecurity Coordinator Michael Daniel just underlines that IG is now seen as a top tier, high-stakes issue by the Obama Administration.

While NETmundial made incremental progress, it failed in one central aim. ICANN claimed that Brazil President Dilma Rousseff had been converted to a multistakeholder model advocate, and that holding this meeting in Brazil could bring the other BRIC nations along. But President Rousseff adopted a half-pregnant position in Sao Paulo, making the politically expedient declaration that there is “no opposition” between the multilateral and the multistakeholder approaches. And Russia, India, and China, along with other developing world nations, all strongly reiterated their support for a UN-led, government centric approach to Internet governance. Those nations collectively comprise about half the planet’s population and the great majority of the next billion Internet users. And a more decisional IGF, along with the UN-affiliated ITU, may provide far more compatible venues for their goals than a one-off NETmundial meeting.

The NETmundial meeting in Sao Paulo kicked off on the morning of April 23rd and one of the speakers at its Opening Ceremony proclaimed that the Internet was a curious type of “Public Commons” in which private domain registrants should be obligated to pay a fee to fund access, capacity-building, and general bridging of the Internet gap between the developing and developed world. That proposal for turning ICANN into a species of Internet tax collector and transnational development project fund disburser came from Nnenna Nwakanma, identified on the event agenda as a member of Civil Society from Africa. Her remarks received resounding applause from attendees.

Surprisingly, similar remarks came during the same session from World Wide Web developer Tim Berners Lee, who declared that the Internet had become “an essential public utility” and that ICANN should act in the best interest of the global Internet community – a duty that he linked to spending funds devoted to “closing the digital divide”. And that divide has been growing, even in those developing nations identified with technological and economic growth – according to a new Global Information Technology Report from the World Economic Forum “many large emerging nations such as China, Brazil and India saw their rankings drop”.

For the past few weeks those who expressed concerns that US withdrawal from its IANA counterparty role might result in greater Internet censorship, or even a global Internet tax, have been met with ridicule from some quarters. Perhaps their concerns are not so ridiculous. It’s easy to imagine the rationale for a “modest” $1 annual digital development fee levied on each registered domain, and ICANN might welcome the opportunity to build ties to Governmental Advisory Committee (GAC) member nations by doling out development dollars.

How much could such a $1 fee raise? According to VeriSign’s April 2014 Domain Name Industry Brief there are now 271 million registered domains, of which 123.5 million are ccTLDs operated by individual nations and likely to be excluded from such a fee as ICANN has no direct authority over them. That leaves 147.5 million domains at gTLDs and would yield $147.5 million per year. Once the precedent is set it’s a simple step to up the levy in future years – crank it up to $5, add in the natural growth in gTLD registrations accelerated by the rollout of more than a thousand new gTLDs, and you can get close to a billion dollars annually without breaking a sweat. That’s a very tempting target, and one that might well be advocated by ICANN’s own GAC at some point – especially if it switches to a majority vote decisional system as an outcome of the Internet governance evolution initiated at NETmundial.

Even more worrisome – the precedent has already been set! Few realize it, but the 2005 .Net registry operator contract between ICANN and VeriSign contained this language levying a 75 cents per .net domain fee for several purposes, one of which was a restricted fund for helping developing nation stakeholders better participate in ICANN :

Registry-Level Transaction Fee. Commencing on 1 July 2005, Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN-accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS.

ICANN mixed that Transaction Fee into its general revenues and never really provided an accounting of how those funds were allocated. Yet the follow-up 2011 .Net agreement contained almost identical language, with an added proviso that ICANN was not required to segregate the funds or establish separate accounts for the designated purposes:

Registry-Level Transaction Fee. Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS; provided, that ICANN will not be required to segregate funds for any such purpose or establish separate accounts for such funds.

Notwithstanding that provision, the ICANN Board committed to an annual accounting when it approved the 2011 .Net contract:

“Whereas, the .NET agreement provides for a US$0.75 registry-level transaction fee, and ICANN has used the funds to support developing country Internet communities to participate in ICANN, enhancing security and stability of the DNS, and for general operating funds. ICANN commits to provide annual reporting on the use of these funds from .NET transaction fees.” http://www.icann.org/en/groups/board/documents/resolutions-24jun11-en.htm#4.rationale

Yet, so far as we can find, ICANN has never provided such annual reports even though the Board committed to them, and the fee is still siphoned into its general funds. That lack of reporting goes to the ongoing problems of ICANN accountability and transparency.

But, getting back to our original point, two speakers at NETmundial opening session suggested that ICANN needs to allocate more funds to closing the digital divide – and ICANN, as we know, gets the vast majority of its funding through the fees paid by domain registrants to registrars and then up-streamed to registries and ICANN. The great majority of gTLD domain registrants reside in the developed world, and the proposal put forward would have them pay a fee to fund projects in the developing world. So the issue of an ICANN-administered “tax” on registrants isn’t that far-fetched after all and does not require a UN takeover to occur. This important issue bears continued close watch by ICA and others.

*****

Other observations drawn from observing the NETmundial meeting remotely for more than ten hours on its opening day:

For a meeting supposedly conceived to strengthen the private sector-led multistakeholder consensus-based policymaking model, we found it curious that 27 of the 30 speakers at the interminable Welcome Remarks session yesterday morning were from governments or UN agencies — with just 1 each from civil society, the private sector, and academia. Not surprisingly, many of those speakers from governments wanted more government involvement in Internet governance.

Notwithstanding the stated desire of the NTIA and ICANN to keep the discussion of the IANA transition confined largely within the ICANN and I-star technical communities, numerous speakers – including Nellie Kroes of the EU and Brazil President Rousseff – called for all global stakeholders to have input. How that will be handled and how it impacts the transition plan’s development remains to be seen. Further, many speakers said that the September 2015 termination of the current IANA contract should be a decisional deadline, and not the mere goal stressed by NTIA and ICANN in recent Congressional hearings.

Despite promises that NSA surveillance would not be discussed, it was raised numerous times in the context of “privacy” and “human rights”. One shot of the meeting room showed numerous attendees holding aloft pictures of Edward Snowden.

Likewise, notwithstanding assurances that NETmundial would just produce general principles and a roadmap for the evolution for Internet Governance, numerous speakers have called for at least producing a list of deliverables and a schedule for achieving them.

It seems almost certain that the Internet Governance Forum (IGF) process will be strengthened as a result of NETmundial, with that meeting being allocated some future decisional powers. This may be a good thing if it staves off greater UN involvement – and likewise, up to a point, for some of the calls for strengthening the role of the Governmental Advisory Committee (GAC) within ICANN.

Net neutrality emerged as a somewhat unexpected issue, probably to the chagrin of the telecommunications firms in attendance.

Finally, the first day’s Fence Straddler Award goes to President Rousseff for her declaration that there was “no opposition” between the government-dominated multilateral model and the private-sector led multistakeholder model. And the MIA Award goes to ICANN CEO Fadi Chehade, who was the only participant in the Opening Ceremony who did not say a word.

As the afternoon session went on, the discussion finally opened up to attendees, who provided their own multiple suggestions for how the conference output document should be amended. That process will continue into NETmundial’s second and final day. Stay tuned.